Farm succession planning where do I start?

Sharon StitzleinPublished: July 28, 2006 12:00AM

Succession planning, estate planning, farm transfer, oh my! It doesnt matter what you call it, it still seems overwhelming, and the most frequently asked question is normally, Where do I start?
The task seems so large that many times the process never does get started. Plus, it is a difficult subject to think about and discuss. No one likes to think about ones own mortality, and for many even retirement from your lifes work is difficult to think about and plan.
There are two very important things to remember, 1) Its better to begin sooner rather than later, dont wait for that rainy day to come, and 2) Succession planning is a process you wont be able to complete in a meeting or two.
The process should not be done by you individually, but should include those involved in the business as well as offspring not involved in the business. You also will want to think about putting together a team of professionals to help, for example, a financial consultant, an attorney, your banker, and/or an OSU Extension educator. Your team can help you plan for the future and also discuss future plans with your family and business partners. Its best to clearly communicate your wishes for the continuation of your farm business now rather than having surprises after you are gone. Those surprises arent fun for the next generation to deal with, and can many times destroy those family bonds and businesses you have spent a lifetime creating.
With that said, this article will try to help you get the process started. One of the best places to start is with goals, both individual and farm goals. Individuals involved in the farming operation should each spend some time thinking about and developing their own short, intermediate and long-term goals. This will help you develop your personal vision statement and then will be the basis for your future decisions in both your personal and business life.
Why should you take the time to write goals and a personal vision statement? The exercise of writing your goals and vision statement will help you gain perspective. Life is so hectic today that we dont often slow down and think about what we really want and how we are going to get there. We just keeping getting through this day to get onto the next. By taking the time to create a personal vision statement, you will be able to use it as a guide to help make everyday decisions as well as life altering decisions. Its never too late to think about your goals and vision. You may think of this as an activity for the next generation, but its very important the older generation have in mind their goals for the transfer of the business, as well as their retirement timeline and aspirations.
When writing your vision statement, you need to think about what is most important to you. Use these questions to help you.
n What do I want?
n When do I want it?
n What am I willing to invest?
n What sacrifices am I willing to make in order to get what I want?
Your most important goals and ambitions should be used as the building blocks for your vision statement. A vision statement is your guiding light through life, the same as a business vision statement is for that business. A vision helps to give you direction and ensures that the actions you take in day to day life contribute to reaching your life and/or business goals.
When you write your vision statement, use your own style. You can write it in essay form, a short paragraph or a list of bullet points describing your goals and objectives. The vision statement should be a description of your life in the future and how you will get there. The goals you will set along the way and how you will accomplish those goals. The act of writing your vision statement is for you, to help you clarify your ideas, so that you may share your thoughts.
After you have your life vision planned, the next step is communicating it to your family and business partners. You dont have to let others actually read what you wrote, but it is important they understand where you are coming from, what drives you and what you want to accomplish in life. By communicating your personal goals and visions with one another, you are opening up the communication channels and this is the first basic step in planning for the future of the family farm.
Dont set your vision aside and forget about it. Revisit it often, as a reminder to keep you on track or maybe just as a motivator. As you travel down lifes road things may change, so an adjustment to your vision statement or maybe your goals may need to be made. Your vision statement should be a living document reflecting your goals and ambitions for your life.
This is just the first step in communicating with your family and starting the process of planning for the future.
In future articles, newsletters and programs we will address other steps in the process, such as management responsibility transfer, estate planning, and retirement planning. The Ohio Ag Manager Extension Team has received a national risk management grant to develop educational materials and programs to help farm families plan for the future and address these topics. Keep your eyes open for new publications and educational opportunities that will be coming in 2007.
n Julia Nolan Woodruff is the County Extension agent, Agriculture, Community Development & Natural Resources, at the Ashland County office of Ohio State University Extension.